Participants of Forex market are divided into two groups by their activity and influence on exchange rates: market makers and market users (same as price takers).
The notion of market makers involves large banks and financial institutions, which determine the current level of the exchange rate due to a significant proportion of their operations in the total world market.
Market makers constantly monitor the rates of various trading tools (ex. Forex currency pairs) as they enter into the transactions with them. Market makers are market participants who provide the liquidity of certain instruments, exposing orders to buy or sell.
Market makers are large international banks and financial institutions that make daily foreign exchange transactions for the purchase or sale of trading instruments for billions and billions of dollars. A certain market has its own market makers.
Similarly, every Forex broker has a market maker or market makers, quotes of which it is offering to their customers. The list of world's major market makers includes: Deutsche Bank, Mizuho Bank, Barclays Bank, PBS, Citi Bank, Chase Manhattan Bank and Union Bank of Switzerland.
To determine whether the organization is a market maker or not, you should take into account not the size of the bank but its part in the total operations of the certain market and its ability to influence the market by setting the price.
Let’s specify that for such trading instrument as USD/CHF, the principal market makers are Credit Suisse Bank and Union Bank of Switzerland. For the Asian currencies, the largest market maker is Standard Chartered Bank and so on.
Market makers set the current exchange rate by conducting transactions with each other, as well as with smaller banks, which are also market participants. Market makers set the exchange rates for the smaller banks, organizations and individuals.
Thus, there is another concept that characterizes other participants of Forex market: market users. Market users are financial institutions, brokerage firms, small banks and individuals who use for their operations the exchange rates that were set by market makers.
Market users are not active players in Forex market, although the total volume of their transactions in the market can be quite large, but the part of each of them is negligible. The role of the small market users is to accept or reject the quotes provided by market makers. Thus, market makers are those who make the price and market users are those who take that price.